Commentary on Economics, Information and Human Action

Regional transmission efforts good for re-routing information flows to regulators

Peter Behr, at ClimateWire, describes the U.S. Department of Energy’s efforts to rework its electric transmission study processes, created in the 2005 Energy Policy Act but stalled by adverse court decisions and political missteps. I’m not so sure that the new approaches will be any better received than the old, but I noticed in the article one salutatory effect from the broad regional transmission studies that the DOE has supported: state regulators are getting better access to competing viewpoints, which make them less dependent on the information provided by their incumbent regulated companies.

From the article:

[DOE’s Lauren Azar] said some interactions among state regulators, utilities, grid managers and interest groups were eye-opening.

“One state came into the process saying, literally, ‘We need absolutely no transmission,'” Azar said, declining to name the state.

“During this process, it became quite clear there was pretty significant congestion in that state. That state is now talking with its neighbors about how best to build transmission across state lines and into its state to bring renewable resources into its state. That did not happen before this process.”

Asked why that state’s regulators happened to be misinformed about congestion issue, Azar sounded her often-heard concern about the need for more competition in the power sector.

“One of the problems that I’ve seen in this industry is market power issues. Some folks that have less competitive generators actually don’t want to see more transmission, because what that does is bring a cheaper commodity into their area, and it threatens their use of their less efficient generators. I think that might be one of the reasons they didn’t get the information they needed.

“It was euphoric for me to be with the regulators and see the light bulbs go off when they realized some of the information they hadn’t been getting,” she said. “This process helped to give them that data.”

2 thoughts on “Regional transmission efforts good for re-routing information flows to regulators”

Not everybody understands what congestion is, even within the industry. People who deal only in interface-oriented transmission transactions (e.g., not in organized market areas with locational marginal pricing) may have odd ideas of what congestion means, and people several steps removed from transactions in those utilities probably have an even foggier view. I was told once that hardly any congestion ever existed (within a particular utility), only to find out that they weren’t counting the frequent times when they had curtailed non-firm transactions crossing their system. Of course, those were other people’s transactions, and curtailing them prevented the utility itself from having to take any other evasive action such as “redispatch.” In my estimation, that was clearly congestion. To them, well, they had avoided congestion. You could hear people say things such as “We didn’t have this congestion issue [in the industry] before we had these markets.” Meanwhile they would complain about TLRs. [Transmission Loading Relief, i.e., curtailing transactions] In fairness, that was some years ago, but only 8. Given the way some utilities channel their regulatory information flow, I am not surprised that regulators could be completely mislead, even if there was no intent to mislead.

D.O.U.G., if I could “like” a comment here, I would click the “like” button. Excellent insight.

And I don’t mean to suggest incumbent utilities meant to mislead, much more likely they simply tried to present themselves in the best possible light in rate cases and other interactions with their regulators.